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Charlie’s Wood Works produces wood products (e.g., cabinets, tables, picture frames, and so on). Production departments include Cutting and Assembly. The Janitorial and Security departments support the Cutting and Assembly departments. The Assembly Department spans about 46,400 square feet and holds assets valued at about $60,000. The Cutting Department spans about 33,600 square feet and holds assets valued at about $140,000. Charlie’s Wood Works allocates support department costs using the direct method. If costs from the Janitorial Department are allocated based on square feet and costs from the Security Department are allocated based on asset value, determine (a) the percentage of Janitorial costs that should be allocated to the Assembly Department and (b) the percentage of Security costs that should be allocated to the Cutting Department.
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Managerial Accounting
- Blue Africa Inc. produces laptops and desktop computers. The companys production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the companys production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is 273,000. The total cost of the Cafeteria Department is 180,000. The number of employees and the square footage in each department are as follows: Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and to each of the production departments.arrow_forwardBlue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and Framing production departments are supported by the Janitorial and Security departments. Janitorial costs are allocated to the production departments based on square feet, and security costs are allo- cated based on asset value. Information about these departments is detailed in the following table: Janitorial Security Department Printing Department Framing Department Department Square feet 760 1,040 4,230 4,770 Asset value $900 $1,240 $12,390 $8,610 Department cost $5,200 $6,600 $33,000 $29,000 Management has experimented with different support department cost allocation methods in the past. The different allocation methods did not yield large differences of cost allocation to the pro- duction departments. Instructions 1. Determine which support department cost allocation method Blue Mountain Masterpieces would most likely use to allocate its support department costs to the production…arrow_forwardBlue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $246,000. The total cost of the Cafeteria Department is $838,000. The number of employees and the square footage in each department are as follows: Employees Square Feet Security Department 10 540 Cafeteria Department 24 2,400 Laser Department 40 3,200 Forming Department 50 2,400 Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and to each of the production departments. CafeteriaDepartment…arrow_forward
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- Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: MaintenanceDepartment SecurityDepartment CuttingDepartment SewingDepartment Machine hours 800 2,000 7,600 10,400 Asset value $2,000 $1,470 $2,500 $5,500 Department cost $41,040 $18,240 $63,000 $81,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. CuttingDepartment SewingDepartment Production departmentsʼ total costsarrow_forwardTemple Lights, Inc. produces Hanukkah menorahs in its Cutting and Molding departments. The Maintenance and Security departments support the production of the menorahs. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on the asset value. Information about each department is provided in the following table: Machine hours Asset value Department cost Maintenance Department 800 $2,000 $40,320 Security Department 2,000 $1,450 $17,920 Cutting Department Production departments' total costs $ 8,400 $2,000 $65,000 Molding Department $ 9,600 $6,000 Determine the total cost of each production department after allocating all support department the production departments using the reciprocal services method. Cutting Department Molding Department $83,000arrow_forwardLogan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Total Labor Hours Used by Departments Operations Sourcing Sourcing Operations 10,000 The costs incurred in the plant are as follows: Departments Departmental Costs Sourcing $ 186,000 Operations 240,000 Assembly 424,000 Finishing 269,000 Total $ 1,119,000 Assembly Finishing 20,000 40,000 60,000 60,000 50,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments…arrow_forward
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